After the threats and the promises; after the bombs, assassinations and security clampdown; after the Sunni boycott and the Shia religious call to vote, the day of Iraq's first free elections in half a century dawned today over a country divided between fear and cautious optimism.

Even as security forces sealed land borders and closed Baghdad airport, insurgents launched an audacious attack on the US embassy inside Baghdad's heavily fortified Green Zone, killing two Americans and wounding four after nightfall yesterday. An eyewitness said the complex had been hit by a rocket, causing an explosion which could be heard across the city centre.

The attack deepened fears of an insurgent blitz today, demonstrating their ability to strike at the heart of the interim government and US power base. More than a dozen polling stations were also attacked yesterday.

Opinion polls have suggested a high turnout of some 14 million Iraqi voters, especially in the Shia and Kurdish areas, but fears persist of a widespread Sunni boycott - and of intimidation of those too frightened to risk the trip to the ballot box.

The country's Sunni president, Ghazi al-Yawwer, said he expected 'a majority, up to two-thirds of eligible Iraqis' to vote but admitted fear of the bombers targeting polling stations would deter some.

A suicide bomber yesterday struck a US-Iraqi security centre in the town of Khanaqin, north east of Baghdad. The US military said three Iraqi soldiers and five civilians were killed. Mortars hit a voting centre in the refinery town of Baiji, wounding four guards. Other sites were dynamited overnight.

South of Baghdad, an Iraqi woman and her child were killed when mortar rounds aimed at an Ameri can base hit their home. And US troops killed two Iraqis in a car near Ramadi, according to witnesses. The circumstances were not immediately known.

But as the blood flowed around Iraq, interim Prime Minister Ayad Allawi urged Iraqis to defy 'our enemies [who] are trying to break us and to break our world'.

He told his people: 'Participate in the elections whether they are inside or outside Iraq: Sunnis, Shias, Kurds, Christians.'

In Baghdad, a hundred calls to prayer echoed from the mosques into empty streets yesterday as US helicopters and fighter jets thundered through the sky, and troops on the ground set up checkpoint after checkpoint, locking down the city with the concrete blast walls and rolls of razor wire.

The people of Baghdad have been stocking up on food, water and fuel and spent yesterday waiting at home. Schools and offices were closed, few drivers dared venture out into the streets and the curfew was enforced from 7pm.

The elections have been overshadowed by a boycott by the Sunni Muslim minority of around 20 per cent which once dominated the country, and a threat by largely Sunni insurgents to unleash a torrent of attacks when Iraq's 5,000 polling centres open early today.

But outside Baghdad and the 'Sunni Triangle', despite the violence, curfews and strict prohibitions on travel, Iraqis were awaiting the vote with keen anticipation. In perhaps two-thirds of the country voting should be able to take place relatively unhindered and Iraqis will select a 275-member National Assembly that will nominate a president and two vice-presidents, who in turn will select a prime minister and government.

They will also be voting in provincial elections - the two races combined seeing some 19,000 candidates stand for election by proportional representation.

In Hai al-Jihad, a violent suburb of Baghdad, militants put up their own propaganda. One poster shows a picture of an American soldier grabbing an Iraqi around his head. Above it is the sarcastic caption: 'In the shade of democracy we will vote with full freedom.'

And the country's split is clear in places like the Shahbandar cafe in the old city, a meeting place for writers and intellectuals.

'I cannot vote. Our country is under occupation,' said Ali Hussein Alwan, 53, who sat wearing an old grey pinstripe suit and a red wool hat. 'All of us believe in elections but not this way.'

On another bench sat Amar Abdul Amir, 43, a poet from a town in southern Iraq, drinking tea from a small china saucer. 'These elections are like a birthday for Iraqis. I am eager to vote,' he said. 'We are never scared. We have a bright future ahead of us. We want to build our country but when we are ready to protect ourselves we want the Americans to leave. This country is for Iraqis only.'

Additional reporting by Peter Beaumont in Basra and Gaby Hinsliff in London